Though US president Donald Trump officially took office just six days ago, his willingness to push his key campaign proposal of building a border wall along the southern border of the United States has already touched off a diplomatic crisis with Mexican officials. After Trump enacted an executive order (of somewhat dubious legality) instructing the federal government to start construction on the wall, Mexico’s president Enrique Peña Nieto cancelled a planned trip to meet Trump in Washington today.

Though Peña Nieto welcomed Trump on a surprise campaign visit to Mexico City last summer, backing down from confronting someone who was then just the Republican Party presidential nominee, Wednesday’s executive order and the White House’s insistence that Mexico will pay for the wall led Peña Nieto to push back in a video message late Wednesday night. Trump responded with his own Twitter rant on Thursday, essentially daring Peña Nieto to cancel the meeting, during which the two presidents planned to discuss cooperation on security and renegotiation of the North American Free Trade Agreement.

No one, however, has been more outspoken against Trump than Fox, who served as president between 2000 and 2006 and who has railed against Trump’s proposed border wall, routinely in profane terms. In September, Fox gleefully took a bat to a Trump-shaped piñata and, upon completion, noted that Trump was just was empty-brained as the empty piñata.

Fox is a former president who knows a little something about political revolutions.

In 2000, he became the first president in seven decades from outside the long-governing Partido Revolucionario Institucional (PRI, Institutional Revolutionary Party). His election, to this day, represents a watershed moment in Mexico’s multiparty democracy. Fox (and his successor) are members of the conservative Partido Acción Nacional (PAN, National Action Party) that held the Mexican presidency for 12 years — until the telegenic Peña Nieto’s election in 2012, when the PRI returned to Los Pinos. Fox, like George W. Bush in the 1990s, was a governor, and before the Sept. 2001 terrorist attacks refocused the Bush administration’s efforts, the two presidents had hoped to work together on immigration reform and deeper harmonization between the two countries, a priority that fell to the back burner with two wars in Afghanistan and Iraq. Continue reading Mexico starts to fight back in earnest against Trump’s US border wall and protectionism threat→

Keeping a promise from his 2016 campaign, US president Donald Trump formally pulled the United States out of the Trans-Pacific Partnership today, a 12-nation trade and investment agreement in the works for nearly a decade.

Though the move will win plaudits from both the populist right and the anti-trade left (including Vermont senator Bernie Sanders, the former Democratic presidential candidate) Trump’s move is the first major unforced foreign policy error of the Trump administration. TPP opposition brings together an ascendant protectionist coalition that includes many of Trump’s populist supporters, but also many rust-belt and leftist Democrats and many organized labor officials.

In junking the US role in the TPP, a death knell for the trade accord, Trump has now cleared the way for the People’s Republic of China to set the baseline for trade rules across the Asia-Pacific region, negating hopes from the previous Obama administration to ‘pivot’ the country’s strategic and economic orientation toward the fast-growing region and backtracking on a decades-long bipartisan consensus that the United States takes an open and, indeed, leading approach to the ideal of free trade.

Though the general terms of global trade will continue to be governed by the World Trade Organization, regional trade deals allow for countries to deepen trade ties in ways that go beyond the standard WTO rules and to develop strategic alliances.

Trump railed against the TPP from the earliest months of his presidential campaign, arguing that it gave China an unfair advantage:

The TPP is horrible deal. It’s a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.

But China was never a signatory to the TPP and, indeed, was never party to the 12-country talks that also included stalwart US allies like Australia, New Zealand, Canada and Japan. The US national interest in negotiating and signing an agreement like the TPP would have been to create a trade paradigm in the region that seeks to help US interests in contrast to Chinese interests and, of course, to draw both traditional allies and new allies closer to the United States economically and strategically.

If anything, the TPP provided a framework to protect the United States from Chinese competition. To the extent that American manufacturing jobs have suffered as a result of international trade, and from trade with China, in particular, it has come from the decision in 2000 by a Republican Congress and Democratic president Bill Clinton to grant permanent normal trade relations to China (which had previously been subject to an annual congressional vote) and in 2001 to admit China to the WTO, lessening the ability of the United States to deploy protective tariffs against China.

Agreements too often fail to address poor labor and environmental standards in the developing world and, when they do, enforcing more equal standards is difficult.

Ignoble compromises over intellectual property force higher prices for life-saving drugs throughout the developing world and benefit Hollywood at the expense of locally produced culture.

In a globalized world where the World Trade Organization reduced many tariffs to nearly zero over the last half-century, free trade deals too often fail to liberalize non-tariff barriers to trade, at least to the extent that proponents might prefer, especially in the most highly protected industries like agriculture and services.

Hillary Clinton, who often championed the TPP when she served as the Obama administration’s secretary of state, came out againstthe trade deal last week, citing the protections for pharmaceutical companies and the lack of mechanisms that deal with potential currency manipulation. Those are odd reasons, though, as many analysts have noted, and her opposition comes after sustained support for the trade deal when she was in office. If anything, the protections for drug companies are far lower than those companies sought (just five to eight years of protection instead of the 12 years that the United States originally wanted). Moreover, currency manipulation has never particularly been an issue of focus in multilateral trade deals, and it’s doubtful that the US government could have won any serious concessions on currency, even if it tried.

Generally speaking, even if you dislike the TPP’s ‘warts and barnacles,’ there’s still a strong theoretical basis for freer trade. But there’s an even more important reason to support the TPP.

Vietnam.

No country stands to gain more from the benefits of free trade and liberalization than Vietnam. As Tyler Cowen eloquently wrote in April for Marginal Revolution:

It has large numbers of state-owned enterprises, and its policies toward such enterprises could use more transparency and predictability, as indeed TPP would bring. Most generally, Vietnam is not today a free country. Bringing Vietnam into TPP would further ensure their attachment to a broadly liberal global trading order. TPP also would bring free(r) labor unions to Vietnam.

Other analysts agree, and there’s a growing consensus that Vietnam will be among the top winners if TPP becomes a reality. With tariffs on garments and footwear set to fall to zero under the TPP, Vietnamese exports will get a boost in the United States at the expense of China and even other free-trade partners like Mexico, because labor costs are still lower in Vietnam. That will help Vietnam maintain its advantage for low-cost manufacturing, even as multinational companies look to even lower labor costs in Laos and Cambodia. Moreover, despite challenges ahead, a widely cited analysis by the Petersen Foundation identified Vietnam as the country with the most to gain from the TPP:

Vietnam would face significant challenges in implementing an agreement that requires stringent disciplines in areas such as labor and government procurement. It also faces tough challenges in maintaining a macroeconomic environment that permits adjustment and encourages long-term investments. But overall, Vietnam’s participation in the agreement is well-founded.

TPP will, accordingly, increase the diversity of Vietnam’s trading partners and reduce its economic reliance on China. When the Obama administration talks about the benefits of TPP in strategic or even military terms, this is one of the most important points — TPP will lessen China’s hold on the southeast Asian economy, at least in the short term, both to the benefit of countries like Vietnam (as well as Malaysia and even more developed countries like Japan and Singapore).

Greater trade between the United States and Vietnam, and greater trade between Vietnam and the European Union, pursuant to another free-trade agreement concluded earlier this year, is expected to increase foreign direct investment in Vietnam, which could help develop a more high-tech and services-based economy and a more educated workforce.

Moreover, arguably no country in the world has suffered more at the hands of US incompetence during a war that today seems as pointless as it was brutal. From the My Lai massacre to carpet-bombing and the gratuitous use of napalm, the US-led war in Vietnam in the 1960s and the 1970s didn’t even accomplish its goal of keeping south Vietnam free of communism. The Cold War mentality at the time skewed the nature of Ho Chi Minh’s original struggle, initially more about self-determination and nationalism than about communist ideology. No one today would argue that the war was worth the sacrifices of US forces, the South Vietnamese or the North Vietnamese.

Vietnamese president Trương Tấn Sang met with US president Barack Obama at the White House in July 2015. (White House)

With TPP, the United States has a chance to ameliorate some of those harms. It was Clinton’s husband who restored normal relations with Vietnam in 1995, and it was Republican George W. Bush who facilitated Vietnam’s WTO entry in 2007. Pulling Vietnam, through TPP, into the global mainstream economy is the next logical step in reducing poverty in a country that’s growing at an estimated 6% this year, and Goldman Sachs, for example, predicts that the Vietnamese economy will surge from $186 billion (the world’s 55th largest) to $450 billion by 2025, making it the world’s 17th largest.

The most underreported aspect of the current crisis over the Crimea annexation is the extent to which Russia was willing to go to the brink of international crisis for the goal of a future trade bloc.

Why does Russian president Vladimir Putin care so much about the vaunted Eurasian Union, even though it’s a rewarmed version of the existing economic customs union among Russia, Belarus and Kazakhstan?

To turn Michael Corleone’s words on their head, ‘it’s personal, not business.’

Putin hoped that the revamped union could attract a few more stragglers in central Asia, Azerbaijan or Armenia and perhaps Ukraine — until February 22.

There are certainly potential gains from greater free trade, and negotiating multilateral trade blocs seems both more efficient than one-off bilateral agreements and more productive than pushing for greater global integration through the World Trade Organization (WTO) process.

Also unlike bilateral treaties or WTO-based agreements, regional trading blocs are also emerging as strategic geopolitical vehicles for advances regional agendas that have just as much to do with politics as with trade.

Ultimately, it’s same reason that the two South American customs unions, the Mercado Común del Sur (MERCOSUR, Suthern Common Market) and the Comunidad Andina (CAN, Andean Community) joined to form the even larger Unión de Naciones Suramericanas (UNASUR, Union of South American Nations), which came into existence in 2008 and covers the entire South American region.

It’s the same reason that Kenyan president Uhuru Kenyatta has put so much pressure on Tanzania to choose between the East African Community (EAC) or the Southern African Development Community (SADC) over the past year by accelerating plans for greater political cooperation within the EAC — with or without Tanzania. Or why admitting South Sudan into the EAC back in 2011 could have helped prevent its slide into civil war.

It’s the same reason that defining ‘Europe’ has been such a strategic and existential issue for the European Union and its predecessor, the European Economic Community, since its inception. Does the United Kingdom belong? (In the 1960s, according to French president Charles de Gaulle, it didn’t). How to handle Turkey? (Enter into a customs union with it, then slow-roll accession talks since 1999, apparently). Should Ukraine join? Moldova? Georgia? If Azerbaijan can win the Eurovision contest, why not bring it into the single market? What about, one day, Morocco and Tunisia, which both have association agreements with the European Union?

That’s why it’s worth paying close attention to the Trans-Pacific Partnership (TPP), but also the Transatlantic Trade and Investment Partnership (TTIP). TTIP would create a super-free-trade-zone between the United States and the European Union, which together generate between 45% and 60% of global trade.

Accordingly, here are 14 possible game-changers — they’re not predictions per se, but neither are they as far-fetched as they might seem. No one can say with certainty that they will come to pass in 2014. Instead, consider these something between rote predictions (e.g., that violence in Iraq is getting worse) and outrageous fat-tail risks (e.g., the impending breakup of the United States).

There’s an old album of small pieces conducted by the late English conductor Sir Thomas Beecham, a delightfully playful album entitled Lollipops that contains some of the old master’s favorite, most lively short pieces.

Think of these as Suffragio‘s 14 world politics lollipops to watch in 2014.

The only dispute between México and Brazil since the emergence of the World Trade Organization is a minor matter — Brazil opened a case in 2000 when it accused México of enacting anti-dumping measures on electronic transformers that were tougher than allowed under the WTO agreement. Brazil, as it turned out, sought consultations with México, and the case never proceeded to a full WTO panel.

But this week’s seen the conclusion of a contest between the two Latin American countries with much more wide-ranging consequences than policy on electronic transformers — the final round to select a new director-general, and it’s a contest that Roberto Azevêdo, a Brazilian diplomat and trade representative, has won the final nomination for the job, and will likely be officially confirmed as the next director-general on May 14.

Azevêdo defeated former Mexican trade minister Herminio Blanco, in a contest between two men that represent the two largest economies in Latin America. As Brazil’s man in Geneva for the past five years, Azevêdo won the post in large part due to his status as a knowledgeable WTO insider. Blanco, who helped draft the landmark North American Free Trade Agreement in the 1990s among the United States, Canada and México, had more high-level experience in government (Azevêdo has never been a cabinet-level minister in Brazil’s government), but has spent his time out of government in the private sector, not in Geneva.

To a degree, the showdown marks the growing, if friendly, rivalry between México and Brazil — the Mexican economy, with a GDP of $1.76 trillion, and an estimated 2012 growth rate of 3.8%, is expected to overtake Brazil’s economy in the next decade. With a GDP of $2.36 trillion, Brazil remains the largest economy in Latin America, and it’s forecast to improve on a paltry 2012 GDP growth rate of 1.7%.

Azevêdo’s win demonstrates that Brazil, one of the four initially identified ‘BRIC’ emerging economies, remains a widely respected player in global economic policymaking, despite its economy’s recent stumbles and a somewhat ambivalent attitude toward global trade from its center-left presidents Luiz Inácio Lula da Silva and Dilma Rousseff, though Brazil was a founding member of the South American free trade bloc, Mercosur (Mercado Común del Sur) in 1991. Blanco’s loss is a rare diplomatic setback to Mexican president Enrique Peña Nieto, who took office less than six months ago and has already enacted a whirlwind of domestic reforms that have made his country once again a darling of international investors.

Azevêdo will succeed Pascal Lamy, the Frenchman who’s been the WTO’s director-general since 2005, and he’ll take over the organization at a time when its role in global trade seems to be on the decline. The Doha round of negotiations, which began way back in November 2001, now seem nearly hopeless, with the WTO members split between the developed world and the developing world.

Indeed, the developed/developing struggle came to define the final round of the race to become the next director-general, with the United States, the European Union, Japan and South Korea allegedly backing México’s Blanco, and China and the rest of the developing world backing Brazil’s Azevêdo. Despite the divide, U.S. and E.U. officials were never intensely opposed to Azevêdo, who will become the first Latin American director-general of the WTO (or its predecessor, the General Agreement on Tariffs and Trade) and the first director-general from the ‘global south’ since Thailand’s Supachai Panitchpakdi held the job from 2002 to 2005.

But the last major Doha negotiations broke down in July 2008, and they haven’t resumed in any significant way since the global financial crisis that exploded later that year. While the WTO has seen its membership grow by 17 since the Doha round began (including China in 2001, Saudi Arabia in 2005, Vietnam in 2007 and Russia in 2012), many countries have moved toward bilateral and regional trade accords. Some WTO proponents fear that such smaller trade agreements undermine the role of the global trade regime, though proponents argue that regional agreements work toward the same underlying goals of greater free trade among the world’s nations.

In particular, the United States is kicking off talks for two of the most ambitious regional trade agreements in U.S. trade history that would far outweigh the impact NAFTA made in the 1990s — the Trans-Pacific Partnership among various Asian, North American and South American nations and the Transatlantic Trade and Investment Partnership between the European Union and the United States. Continue reading Who is Roberto Azevêdo? (And does he matter?)→

Former World Trade Organization director-general Michael Moore — a former New Zealand prime minister and the country’s current ambassador to the United States — spoke Friday afternoon at the Johns Hopkins University’s School of Advanced International Studies about world trade, regional trade and the future of the WTO’s Doha development round of negotiations — a round that begin under Moore’s tenure in 2001.

The Doha round seems more hopeless than ever today, and the United States is currently ramping up for the biggest round of regional trade agreements since the adoption of the North American Free Trade Agreement in the 1990s, with high hopes for the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union as well as for the Trans-Pacific Partnership (TPP).

The latter, currently a free-trade agreement among New Zealand, Chile, Singapore and Brunei, would expand to create a Pacific free-trade zone to include the United States, Canada, México, Perú, Australia, Thailand, Malaysia, Vietnam and others — including, quite possibly, Japan, given prime minister Shinzo Abe’s enthusiasm to join negotiations as well.

Moore (pictured above) joked that though he’d written in the past as WTO director-general against regional trade agreements — they are sometimes thought to distract from the push for global reductions in tariffs and other barriers to trade — New Zealand’s been rather promiscuous about regional trade over the past decade, noting the irony that in his current role, he’s now involved with TPP negotiations.

He cautioned that if the WTO’s member states don’t get moving in Geneva soon, the WTO’s dispute system could suffer, and he now argued that TTIP and TPP could actually point the way forward for the world trade regime.

Moore affirmed his support for New Zealand’s candidate for WTO director-general, Tim Groser, who previously served as ambassador to the WTO from 2002 to 2005, currently serves as New Zealand’s minister for trade and climate change issues, though he has nearly 30 years of experience prior to his appointment as WTO ambassador working on trade policy. So Groser clearly known trade policy and he clearly is on the front lines of policy issues in the Asia/Pacific and TPP negotiation.

Moore added, however, that any number of candidates can do the job, and he noted that the selection process has much improved from the days when the United States and Europe would essentially decide, perhaps in tandem with Japan — Moore said it was a good thing that nominees feel they have to visit the capitals of small countries as well as large countries to make their pitch.

Three regions — the Middle East, Latin America and Africa — are vying for their candidates to become their region’s first respective director-general of the WTO (or its predecessor regime before 1995, the General Agreement on Tariffs and Trade).

Notably, Africa and Latin America are thought to have a decent shot. Ghana’s former trade minister and former ambassador to the United States, Alan John Kwadwo Kyerematen, is believed to be the most credible candidate to emerge from sub-Saharan Africa. Three candidates from Latin America include Costa Rican trade minister Anabel González, who was her country’s chief negotiator to the Central America-U.S.-Dominican Republic Free Trade Agreement (CAFTA); Brazil’s current permanent representative to the WTO, Roberto Carvalho de Azevêdo; and former Mexican trade minister Herminio Blanco, who previous served in the 1990s under former president Ernesto Zedillo. Continue reading Michael Moore (unsurprisingly) backs Tim Groser for WTO director-general→

Share this:

Support Suffragio

Donation Amount:(Currency: USD)

About Suffragio

Suffragio attempts to bring thoughtful analysis to the political, economic and other policy issues that are central to countries outside of the US -- to make world politics less foreign to the US audience. Suffragio focuses, in particular, on those countries and regions with upcoming or recent elections.